Category

Event-Driven

Apr 25
0

Event-Driven: Bank Central Asia, Toyo Construction, Converge ICT Solutions, Nissan Motor, Ramsay Health Care and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • IDX30/LQ45/IDX80 Index Rebalance: Float & Capping Changes
  • ToyoKen (1890) – YFO Proposes ¥1,000/Share So Now We Need Discussions
  • MSCI May 2022 Index Rebalance Preview: Changes from Week 1 in the Review Period
  • Renault (RNO FP) To Sell Nissan (7201 JP) Shares? Not Yet, and Not Yet Positive Nissan.
  • Merger Arb Mondays (25 Apr) – VNET, Yashili, Dongzheng AFC, Sezzle, Link, Razer, Ramsay Health

IDX30/LQ45/IDX80 Index Rebalance: Float & Capping Changes

By Brian Freitas

  • Float and capping changes will require passive trackers to buy Bank Central Asia (BBCA IJ) and sell Bank Rakyat Indonesia Persero (BBRI IJ) at the close on 28 April.
  • There will be passive changes to other stocks too, though the impact will not be material on most of the stocks.
  • GoTo (GOTO IJ) could be added to the IDX30, LQ45 and IDX80 indices in May. With the oversubscription option nearly all used up, the stock should trade weak near-term.

ToyoKen (1890) – YFO Proposes ¥1,000/Share So Now We Need Discussions

By Travis Lundy

  • Yamauchi No10 Family Office (YFO) Friday declared a fourth buyer in its group and reached 26.28% as of the 19th. 
  • Toyo Construction revealed a back-and-forth between itself and YFO in which it was revealed It YFO had also proposed a Tender Offer at ¥1,000/Share subject to discussions and Board Agreement. 
  • This, and YFO’s position make Infroneer’s ¥770/share Tender Offer somewhat untenable. Shares could become more volatile. 

MSCI May 2022 Index Rebalance Preview: Changes from Week 1 in the Review Period

By Brian Freitas

Renault (RNO FP) To Sell Nissan (7201 JP) Shares? Not Yet, and Not Yet Positive Nissan.

By Travis Lundy

  • On Friday, a Bloomberg article suggested Renault SA (RNO FP) is considering selling some of its 43% stake in Nissan Motor (7201 JP) to help fund its efforts in EVs.
  • Sources were “people familiar with the matter.” Since 2018, Bloomberg and Les Echos have been the outlets which do “scoops” on the Renault/Nissan relationship, but they are not always right.
  • However, it raises some interesting questions and possibilities. And given the prices, it makes the decision somewhat uncomfortable for both. 

Merger Arb Mondays (25 Apr) – VNET, Yashili, Dongzheng AFC, Sezzle, Link, Razer, Ramsay Health

By Arun George

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Apr 24
0

Event-Driven: Razer Inc, Allo Bank Indonesia Tbk PT, Guodian Technology & Environment Group, Keppel Corp, Ramsay Health Care and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting
  • Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care
  • Guodian Tech’s Offer Risk/Reward – Pre-Condition Satisfied
  • Last Week in Event SPACE: Didi Global, Ramsay Health, Keppel Corp, Melco, Toshiba, Twitter
  • Asia-Pac Weekly Risk Arb Wrap: Ramsay Health, Dongzheng Auto, Cleanaway, Hitachi Transport, DGO Gold

Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting

By Arun George

  • The amended Cayman Islands Act is yet to become law which increases the odds that the headcount test remains for Razer Inc (1337 HK)‘s court meeting on 26 April. 
  • Since the despatch of the scheme document, the gross spread has narrowed to 7.6% (last close). Current deal probability implies an 80% chance of success.
  • The rising deal probability negatively skews the risk/reward profile. We are hesitant to be long this trade into a scheme meeting that is too close to call.

Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care

By Brian Freitas

  • The review period for the price cutoff of the MSCI May SAIR commenced last week and will run through the coming week. MSCI normally chooses a day from week 1.
  • Yangzijiang Financial Holding Ltd (YZJFH) will list on 28 April and one stock will be deleted from the FTSE Straits Times Index (STI) (STI INDEX) at the close on 4 May.
  • There were inflows to China and Taiwan focused ETFs, while there were outflows from Korea focused ETFs.

Guodian Tech’s Offer Risk/Reward – Pre-Condition Satisfied

By Arun George

  • Guodian Technology & Environment Group (1296 HK)’s privatisation offer from China Energy is HK$1.08 per H share. The pre-condition was fulfilled on 22 April.  
  • The key conditions for the delisting will be approval by at least 75% of independent H-shareholders (<10% of all independent H-shareholders rejection). There is no minimum acceptance condition.  
  • At last close and for a mid-June effective date (composite document despatched by 29 April), the gross and annualised spread to the offer is 2.9% and 19.9%, respectively.

Last Week in Event SPACE: Didi Global, Ramsay Health, Keppel Corp, Melco, Toshiba, Twitter

By David Blennerhassett

  • DiDi Global (DIDI US) had serious data problems. It still listed itself, against the wishes of the regulators. Then it got in serious hot water. And it’s been getting hotter. 
  • Ramsay Health Care (RHC AU) announced an unsolicited, non-binding Offer from KKR (and HISTA), at A$88.00/share, a 36.7% premium to last close, however, earnings have been left bedridden by the pandemic.
  • Post-Deal, Keppel Corp (KEP SP) will look more like Sembcorp Industries (SCI SP). More engineering, less power generation infra assets, more other infra assets and more data centres. 

Asia-Pac Weekly Risk Arb Wrap: Ramsay Health, Dongzheng Auto, Cleanaway, Hitachi Transport, DGO Gold

By David Blennerhassett

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Apr 23
0

Event-Driven: Toshiba Corp, Yangzijiang Shipbuilding, DGO Gold Ltd and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Toshiba (6502) – Now We Have “That One Piece Of News”
  • Straits Times Index (STI) Rebalance Preview: Impact of Yangzijiang Shipbuilding Spin-Off
  • Toshiba – Market Reaction to Proposal Solicitation News Is a Great Short Opportunity
  • DGO Gold: Target Statement On Gold Road’s Offer

Toshiba (6502) – Now We Have “That One Piece Of News”

By Travis Lundy

  • Toshiba announced that it will start a sale process by offering info, and running a two-round “strategic alternative” process. Info and non-binding proposals followed by due dili and binding proposals.
  • For me, this seems like “That One Piece Of News” which is required to make the range jump, and to get people into Now-We-Are-Going-To-Get-A-Deal. 
  • We may not, of course, and it will be a long, complicated road. But this is a step change. Starting a beauty contest is a big deal.

Straits Times Index (STI) Rebalance Preview: Impact of Yangzijiang Shipbuilding Spin-Off

By Brian Freitas

Toshiba – Market Reaction to Proposal Solicitation News Is a Great Short Opportunity

By Mio Kato

  • Toshiba announced yesterday that they would be soliciting proposals on strategic alternatives specifically mentioning privatisation. 
  • The stock is up 3.5% on the news and had been up as much as 6.5% in a very weak market despite the news being well foreshadowed. 
  • At the current price we believe there could be limited scope for a significant premium and much downside if tech turns over.

DGO Gold: Target Statement On Gold Road’s Offer

By David Blennerhassett

  • DGO Gold Ltd (DGO AU) has issued its Target Statement in response to Gold Road Resources (GOR AU)‘s all-scrip off-market Offer. 
  • The Offer was open to acceptance on the 8 April and will close (unless extended) on the 9 May. 
  • DGO’s directors unanimously recommend the Offer, in the absence of a superior proposal.

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Apr 22
0

Event-Driven: Keppel Corp, Suchuang Gas Corp, PICC Property & Casualty H, Hitachi Transport System, SK Bioscience, HS Holdings, Dongzheng Automotive Finance, John Menzies PLC and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
  • Suchuang Gas’ Privatisation Offer in Limbo as Additional Resumption Guidance Disclosed
  • FTSE China 50 Index Rebalance Preview: Two Changes Could Increase to Three
  • Hitachi Transport (9086) Takeover Deal Imminent
  • SK Chemical’s CEO Sells All His Shares of SK Bioscience
  • HS/Sawada:  Khan Bank IPO Decided, and Earnings in A Week To Show Sharp Gain in BVPS/Liquidity
  • Auction of China ZhengTong’s Dongzheng Stake Set for 18 May; Potential MGO
  • Dongzheng (2718 HK): 18th May Liquidation Of ZhengTong’s Stake
  • National Aviation Services/​John Menzies: Agreed Final Offer

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities

By Travis Lundy

  • 20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
  • The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again. 
  • Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.

Suchuang Gas’ Privatisation Offer in Limbo as Additional Resumption Guidance Disclosed

By Arun George

  • CR Gas (1193 HK)’s privatisation bid for Suchuang Gas Corp (1430 HK) was derailed by the trading suspension due to the disclosure of previously unaccounted for pledges/guarantees by subsidiaries.
  • The controlling shareholders have attempted to keep the offer alive by agreeing to fully indemnify CR Gas for losses related to the pledges/guarantees.
  • The long stop date of the offer was extended to 31 August 2022. The key risk is that the timeframe to fulfil the resumption guidance exceeds the long stop date. 

FTSE China 50 Index Rebalance Preview: Two Changes Could Increase to Three

By Brian Freitas

Hitachi Transport (9086) Takeover Deal Imminent

By Travis Lundy

  • The Nikkei Leak Article of the Hitachi Transport takeover price is out. That suggests board meetings and deal announcement are imminent
  • The price suggested in the article comes out to be just under ¥8,000. 
  • Past deals between KKR and Hitachi for Hitachi subs (and the language of the article on deal structure) suggest the minority Tender Offer Price could be different.

SK Chemical’s CEO Sells All His Shares of SK Bioscience

By Douglas Kim

  • After the market close on 21 April, it was reported that SK Chemical’s CEO Jeon Kwang-Hyun sold all his shares (21,852 shares) of SK Bioscience from April 19th to 21st.
  • The fact that the CEO of SK Chemical, the controlling shareholder of SK Bioscience, sold all his stake in the latter company does not bode well for SK Bioscience. 
  • The CEO of SK Chemical selling all his shares in SK Bioscience and increasing reluctance in getting more COVID booster shots suggest further downside risk for SK Bioscience. 

HS/Sawada:  Khan Bank IPO Decided, and Earnings in A Week To Show Sharp Gain in BVPS/Liquidity

By Travis Lundy

  • It looks like the Khan Bank IPO in Mongolia is on. 
  • HS Holdings (former Sawada) will own <50% shortly. That will trigger de-consolidation of Khan Bank in Q2. 
  • That could be meaningful. Right now, the entire capital structure is in flux because of recently announced/booked/closed asset sales and now this. Earnings are out 28 April. 

Auction of China ZhengTong’s Dongzheng Stake Set for 18 May; Potential MGO

By Arun George

  • On 16 April, the Shanghai Financial Court published the details for the auction of China Zhengtong Auto Services Hldg (1728 HK)’s 71.04% stake in Dongzheng Automotive Finance (2718 HK). 
  • If the auction is successful and results in any person and a group of persons acting in concert holding 30%+ of the voting rights, it will result in an MGO.
  • The base bid implies an MGO price of HK$1.294 per H Share, a 112.1% premium to the last close. The auction will be held from 18 May to 19 May.

Dongzheng (2718 HK): 18th May Liquidation Of ZhengTong’s Stake

By David Blennerhassett

  • After both stocks were suspended on the 19 April, the forced liquidation of China Zhengtong (1728 HK)‘s stake in Dongzheng (2718 HK) will occur, via auction, on the 18 May. 
  • That minimum bid price is HK$1.294/share, or a 112% premium to last close.
  • ZhengTong’s stake is 71.04% of shares out. A mandatory general offer – conditional or unconditional – may materialise from the auction process. 

National Aviation Services/​John Menzies: Agreed Final Offer

By Jesus Rodriguez Aguilar

  • The contracts, presence in airports and relationships make John Menzies a difficult business to replicate. NAS has a direct stake of 19% and undertakings and letters of intent for 33.3%.
  • The 608p final offer represents a 107% premium to the 3-month VWAP and 6.1x EV/Fwd EBITDA, and is 10% above my fair-value estimate (551p/share, DCF based WACC 9.0%, 4.5x EBITDA exit multiple).
  • The offer is highly likely to close. Gross spread is 1.48% with an estimated annual return of 4.78% (assuming settlement by 15 August). Reiterate long MNZS LN.

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Apr 21
0

Event-Driven: Toshiba Corp, Cleanaway Waste Management, Seegene Inc, Kakao Pay, Ramsay Health Care, Dongzheng Automotive Finance, Tesla Motors, OCI NV, LG Energy Solution and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Toshiba – Some Thoughts on the Bain Article
  • KKR’s Waste Measurement For Cleanaway?
  • MSCI Korea May SAIR: One Adds & One or Two Deletes
  • Kakao Pay Passive Play Opportunity on June 9
  • Ramsay’s Indicative Bid from the KKR Consortium
  • Dongzheng (2718 HK): Potential Offer As ZhengTong’s Stake Gets Liquidated
  • Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint
  • STOXX Europe Indices: Quiddity Leaderboard for June 2022 Rebalance
  • LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits
  • Tesla Q1 Results: Strong Beat But Cautious Outlook

Toshiba – Some Thoughts on the Bain Article

By Mio Kato

  • Yesterday the Nikkei published an article featuring Bain MD Yuji Sugimoto who also featured heavily during their bid for Kioxia. 
  • Sugimoto commented that in the event of a buyout there would be no break-up of Toshiba. 
  • While plausibly a PR move directed at employees that stance raises the question of exactly how they would unlock value.

KKR’s Waste Measurement For Cleanaway?

By David Blennerhassett

  • The AFR is reporting that KKR is preparing an Offer for waste management outfit Cleanaway Waste Management (CWY AU). No price has been revealed. 
  • This is a business KKR understands. It bought, and shortly thereafter sold, Cleanaway 15 years ago. 
  • KKR also recently sought to acquire Waste Management New Zealand.

MSCI Korea May SAIR: One Adds & One or Two Deletes

By Sanghyun Park

  • At this point, we have only one candidate for addition: Hyundai Heavy Industries (329180 KS).
  • Seegene Inc (096530 KS) currently ranks at the bottom by market cap and is closely followed by Green Cross (006280 KS). So, we have two strong candidates for exclusion.
  • The passive outflow size of Green Cross is relatively large. In the case of HHI, HHI’s share price may become more volatile as we move into the SAIR announcement.

Kakao Pay Passive Play Opportunity on June 9

By Sanghyun Park

  • A passive play opportunity for Kakao Pay (377300 KS) is approaching.
  • Its float rate will likely be raised in the KOSPI 200 June rebalancing. Then, in the KOSPI 200 IT Sector Index, it will again experience the most significant passive inflow.
  • The recent share price volatility has increased considerably. So, instead of a preemptive position buildup, a shorter-window passive play seems more appropriate just before the rebalancing trading day.

Ramsay’s Indicative Bid from the KKR Consortium

By Arun George

  • The KKR consortium will offer A$88.00 per share less any dividends paid after the date of the indicative proposal. The offer less interim dividend of A$0.485 is A$87.52 per share.
  • The Ramsay Health Care (RHC AU) Board has provided due diligence access. We think the offer is attractive and represents an all-time share price high. 
  • The largest shareholder is said to be supportive. The gross spread of the offer less the interim dividend of A$87.52 to the last close price of A$80.00 is 9.4%. 

Dongzheng (2718 HK): Potential Offer As ZhengTong’s Stake Gets Liquidated

By David Blennerhassett

  • Both Dongzheng Automotive Finance (2718 HK) and China Zhengtong Auto Services Hldg (1728 HK) issued HKEx suspension notices at the same time yesterday morning.
  • In no uncertain terms, the Shanghai office of the China Banking and Insurance Regulatory Commission has forced the liquidation of ZhengTong’s 71.04% stake in Dongzheng.
  • That stake “sale” may trigger an Offer for Dongzheng. Dongzheng’s suspension is “pursuant to the Hong Kong Code on Takeovers and Mergers“.

Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint

By SC Capital

  • Tesla’s Q1 results on April 20th (after market) will likely beat Street estimates, but the overshoot may not be as important as profit margins, which should decline versus Q4 2021.
  • Q2 outlook is grim, given the lockdown of Tesla’s Shanghai factory. Even if output ramps up in May, exports–which are 40% of output–may not recover due to epic port congestion. 
  • Tesla has 2 new factories ramping up as of this month. A slowdown at its most profitable plant amid start-up costs could raise the need for equity financing.  

STOXX Europe Indices: Quiddity Leaderboard for June 2022 Rebalance

By Janaghan Jeyakumar, CFA

  • The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.
  • The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.
  • Below is a look at the Potential Adds and Deletes for the STOXX Europe 600 Index and the EURO STOXX Index in the upcoming index review in June 2022.

LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits

By Sumeet Singh

  • LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.
  • LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

Tesla Q1 Results: Strong Beat But Cautious Outlook

By SC Capital

  • Tesla’s Q1 operating income beat consensus estimates by 38% (ours by 26%), while GAAP net income came in 42% above consensus (36% above ours). 
  • The highly focused automotive gross margin (Ex-ZEV credits) came to 30% versus consensus estimates of 27.8% and ours of 27.5%. Costs were booked in R&D rather than COGS.
  • The results were solid, but the CFO cautioned on Q2 headwinds. Tesla was up by 5.6% in the after hours on these results, ignoring Tesla’s cautious Q2 outlook. 

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Apr 20
0

Event-Driven: Sumber Alfaria Trijaya Tbk Pt, Chubu Electric Power Co, Japan Post Holdings, Ramsay Health Care, Tsi Holdings, Kakao Pay, Melco International Development, Cleanaway Waste Management, DiDi Global, Mindtree Ltd and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • MSCI May 2022 Index Rebalance Preview: Changes as We Start the Review Period
  • S&P Global Clean Energy Index: Changes for Asia & Impact
  • Japan Post Holdings – Good Play On the BOJ’s Conundrum
  • Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications
  • TSI Holdings (3608) – That Old Gem – Lots of Visible Cash, and Lots More Invisible Cash
  • Kakao Pay: End of 6 Months Lock-Up Period Could Further Put Negative Pressure on Share Price
  • StubWorld: Melco Trading Rich As Lawrence Adds To His Position
  • KKR to Make a Move for Cleanaway?
  • Didi – A Quick Look at Latest Results Before Delisting
  • Mindtree-LTI: A Potential US$20bn+ Indian Tech Merger; Mindtree Could Outperform LTI

MSCI May 2022 Index Rebalance Preview: Changes as We Start the Review Period

By Brian Freitas

S&P Global Clean Energy Index: Changes for Asia & Impact

By Brian Freitas

Japan Post Holdings – Good Play On the BOJ’s Conundrum

By Mio Kato

  • The BOJ looks increasingly trapped between a rapidly depreciating yen and a stated desire to hold rates low. 
  • We believe that the BOJ will eventually have to compromise on its 0.25% ceiling for the ten year JGB once inflation data gives them cover to do so. 
  • However, we believe Japan Post Holdings could potentially benefit from both macro forces and consider it one of the best risk-reward positions in Japan and perhaps globally.

Ramsay Health Care (RHC AU): Indicative Proposal from KKR & Index Implications

By Brian Freitas

  • A KKR led consortium has made a conditional, non-binding, indicative proposal to acquire 100% of the shares in Ramsay Health Care (RHC AU) at A$88/share in cash.
  • The offer values Ramsay Health Care (RHC AU) at A$20.14bn and is a premium of 36.7% to the last close. The premium is over 30% even using longer term VWAPs.
  • There will be changes to the S&P/ASX family of indices to maintain the number of index members. We will know more once an indicative timeline is published.

TSI Holdings (3608) – That Old Gem – Lots of Visible Cash, and Lots More Invisible Cash

By Travis Lundy

  • TSI Holdings has long had a lot of cash and securities but a dearth of income. It’s still that way.
  • Earnings were pretty good, but forecasts disappointing. The MTP is much more aggressive. 
  • The company has an EV/Revenue of 0.03x and EV/EBITDA of 0.5x. THEN it has a lot more interesting stuff hidden away. This could double or more in two years.

Kakao Pay: End of 6 Months Lock-Up Period Could Further Put Negative Pressure on Share Price

By Douglas Kim

  • Kakao Pay’s six months end of the lock-up period comes up on 3 May, which could further put negative pressure on its share price. 
  • Other factors including heightened competition, lack of margin improvement in 2021, and lifting nearly all social distancing measures in Korea are likely to further negatively impact Kakao Pay. 
  • We expect additional 20 to 30%+ downside risk for Kakao Pay from current levels over the next 6-12 months. 

StubWorld: Melco Trading Rich As Lawrence Adds To His Position

By David Blennerhassett

KKR to Make a Move for Cleanaway?

By Arun George

  • An AFR article claimed that KKR & Co Inc (KKR US) is preparing an offer for Cleanaway Waste Management (CWY AU). The shares rose 5.9% to close at A$3.24.
  • KKR has a long history with Cleanaway. Private equity has recently acquired waste management companies that are increasingly viewed as “infrastructure-like’’. 
  • Cleanaway’s scale, cash generation and modest leverage make it a target. A forward EV/EBITDA multiple of 15.8x, in line with Bingo Industries (BIN AU)’s acquisition multiple, would imply A$3.92.

Didi – A Quick Look at Latest Results Before Delisting

By Shifara Samsudeen, ACMA, CGMA

  • Didi on Monday announced that it will hold an EGM of shareholders on 23rd May for a vote on the voluntary delisting of the company’s ADS’ from the NYSE.
  • The company has mentioned that it will not apply for listing it shares on any other stock exchange before the completion of delisting.
  • Didi also has reported its 4Q2021 results and we take a look at the company’s recent results in this insight.

Mindtree-LTI: A Potential US$20bn+ Indian Tech Merger; Mindtree Could Outperform LTI

By Janaghan Jeyakumar, CFA

  • On Monday, Bloomberg reported that Larsen & Toubro (LT IN) was planning a merger between its public-listed subsidiaries Mindtree Ltd (MTCL IN) and Larsen & Toubro Infotech (LTI IN). 
  • The companies have responded by saying that the news reports of a merger between MINDTREE and LTI are “speculative in nature“.
  • Below is a closer look at the likelihood of this Deal and the valuations of the two companies involved in this event.

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Apr 19
0

Event-Driven: DiDi Global, Renesas Electronics, Hyundai Heavy Industries, Mirae Asset TIGER Secondary Cell ETF, SK Telecom, Beenos Inc, Twitter Inc, Atlantia SpA and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • DIDI Decides To Delist – Now It Gets Messy
  • Renesas (6723 JP) – On Top of Peer-Beating Growth, and Valuation… Watch for Buybacks
  • DiDi to Vote on US Delisting on 23 May
  • Hyundai Heavy Industries: Passive Inflow Timeline (MSCI & K200) & Position Closing Timing
  • Recap on WISE Theme Indexes (TIGER ETFs) Rebalancing Trading on April 14
  • Korea FOL (Foreign Ownership Limit) Stock List: MSCI Flow Trading on KT & SKT
  • Beenos Valuation: SOTP Suggests Plenty of Upside Potential
  • Twitter Launches Its Poison Pill – Now We Wait
  • Edizione & KKR/Atlantia: Defensive and Generous Takeout Offer

DIDI Decides To Delist – Now It Gets Messy

By Travis Lundy

  • The company was told a year ago that it had data problems. It was then told in June it had serious data problems and was given 15 days to fix.
  • It did not. It listed itself, against the wishes of the regulators. Then it got in serious hot water. And it has only been getting hotter. 
  • A hoped-for HK Listing By Introduction was nixed 5 weeks ago. Now the Company is simply going to delist to try to solve its problems behind closed doors before relisting.

Renesas (6723 JP) – On Top of Peer-Beating Growth, and Valuation… Watch for Buybacks

By Travis Lundy

  • A bit over a year ago Renesas Electronics (6723 JP) announced its transaction to buy Dialog Semiconductor (DLG GR) for €4.8bn (roughly ¥624bn) and the transaction closed end-August 2021.
  • In September, Renesas announced a “Progress Update” covering various business segments, expectations for supply in the sector, and eventual “shareholder return” policy.
  • This past week the Nikkei carried an article talking about a possible stock buyback later this year. I explore.

DiDi to Vote on US Delisting on 23 May

By Arun George

  • DiDi Global (DIDI US) will hold an EGM on 23 May to vote to delist the ADS from the NYSE. The shares will not be listed on another exchange before delisting. 
  • Due to the regulatory restrictions, DiDi is losing market share and pricing power to competitors in China. The 4Q21 results were poor. 
  • Directors and key pre-IPO investors together account for 48.2% of outstanding shares, suggesting that the ordinary resolution will pass. 

Hyundai Heavy Industries: Passive Inflow Timeline (MSCI & K200) & Position Closing Timing

By Sanghyun Park

  • The typical approach for the MSCI rebalancing trading is to close the position around the announcement. However, HHI is waiting for another passive inflow event right after MSCI SAIR.
  • KOSPI 200 rebalancing trading usually starts six weeks before implementation. It means early May, which coincides with the closing timing of the MSCI rebalancing trading position.
  • Suppose the sentiment for the local shipbuilding sector will remain neutral. In that case, KOSPI 200 flow makes us consider pushing back the position closing for the MSCI flow trading.

Recap on WISE Theme Indexes (TIGER ETFs) Rebalancing Trading on April 14

By Sanghyun Park

  • In general, the projection hit rate for the top market cap constituents was sufficiently high. And the correlation between their stock price direction and passive flow was also high.
  • However, the projection hit rate for the constituents with a small market cap was relatively low.
  • If we traded the proposed tradable names with an equal-weighted Long/Short basket, we would have achieved a return of 1.76%. Even excluding Hanjin Kal, we would have achieved 1.31%.

Korea FOL (Foreign Ownership Limit) Stock List: MSCI Flow Trading on KT & SKT

By Sanghyun Park

  • SKT has a good chance of being deleted with the current level of foreign room. If it gets deleted, it will likely experience a passive outflow of 3.02x ADTV.  
  • KT Corp will also face the Price Cutoff Date, which should re-test KT’s foreign room status. The chances that it will eventually fail the inclusion also seem pretty high.
  • We need to engage in short-term trading aimed at the possibility that they will face a price correction around the MSCI May SAIR result announcement.

Beenos Valuation: SOTP Suggests Plenty of Upside Potential

By Oshadhi Kumarasiri

  • Leading up to the GoTo IPO, Beenos Inc (3328 JP) shares rallied more than 80% to ¥2,364 per share, possibly expecting substantial listing gains from the “conservatively” priced GoTo IPO.
  • GoTo (GOTO IJ) opened around 18% above its IPO price on 11th April 2022, but Beenos fell by around 7% and 8% on 11th and 12th April 2022 respectively.
  • It may be too late to ride the GoTo IPO rally, but exposure to a high-profile company like GoTo brings visibility, resulting in a much narrower NAV discount.

Twitter Launches Its Poison Pill – Now We Wait

By Travis Lundy

  • Twitter Inc (TWTR US) announced a poison pill in a press release Friday with details in an 8-K Monday. It will dividend out one right/share on record date 25 April. 
  • The right would allow Rightsholders, under certain conditions, to purchase $420 of shares for $210. That number is not a coincidence. 
  • Some will get upset by this, but there is a lot of fine print. And I review how the poison pill fits into Delaware hostile defence standards.

Edizione & KKR/Atlantia: Defensive and Generous Takeout Offer

By Jesus Rodriguez Aguilar

  • On 14 April, a consortium led by Edizione launched a defensive delisting takeover bid for Atlantia for €23/share (which won’t be adjusted for the €0.74 dividend payable before end of acceptance).
  • The premium is 24.4% (before takeover rumors), and represents 8.9x EV/Fwd Revenue and 14.1x EV/Fwd EBITDA (Capital IQ consensus). The offer price is 16% higher than my SOTP valuation (€19.82/share).
  • It is almost a knock-out bid with minimal interloper risk. Gross spread to the aggregate amount is 4%, annualised return is 18% (assuming 13 July settlement). Recommendation is long ATL IM.

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Apr 18
0

Event-Driven: 21Vianet Group and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Merger Arb Mondays (18 Apr) – Yashili, VNET, Sezzle, Link Admin, Razer, Excelpoint, Guodian

Merger Arb Mondays (18 Apr) – Yashili, VNET, Sezzle, Link Admin, Razer, Excelpoint, Guodian

By Arun George

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Apr 17
0

Event-Driven: JD.com Inc., Yangzijiang Shipbuilding, Toyo Construction and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Last Week in Event SPACE: JD.com, Suzuki, Twitter, Toyo Construction, Uniti Group, Singapore Press
  • Index Rebalance & ETF Flow Recap: MSCI, TOPIX, KT/SKT, GoTo, Yangzijiang, Emperador, SK Shieldus
  • Asia-Pac Weekly Risk Arb Wrap: Excelpoint, Tri Stage, Toyo, Uniti, Western Areas, Suchuang Gas

Last Week in Event SPACE: JD.com, Suzuki, Twitter, Toyo Construction, Uniti Group, Singapore Press

By David Blennerhassett

  • JD.com (9618 HK)‘s CCASS movements are a thing, and there are things going on in the background, but the things in the foreground are not as menacing as they appear. 
  • Suzuki Co Ltd (6785 JP)‘s NAV discount and implied stub plumb new lows. Again.
  • Musk has made a non-binding proposal for Twitter Inc (TWTR US) at US$54.20/share. Get it? Get it? Nudge nudge wink wink. That’s all part of the fun for him.

Index Rebalance & ETF Flow Recap: MSCI, TOPIX, KT/SKT, GoTo, Yangzijiang, Emperador, SK Shieldus

By Brian Freitas

  • The review period for the MSCI May SAIR starts on Monday, 18 April and will run for 10 trading days, though MSCI usually selects one of the first five days.
  • GoTo (GOTO IJ) listed during the last week and could be a Fast Entry to the IDX indices. The Yangzijiang Shipbuilding (YZJSGD SP) spinoff has index implications.
  • Relatively large inflows into China focused ETFs during the week, while there were outflows from Korea focused ETFs.

Asia-Pac Weekly Risk Arb Wrap: Excelpoint, Tri Stage, Toyo, Uniti, Western Areas, Suchuang Gas

By David Blennerhassett

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Apr 16
0

Event-Driven: Singapore Press Holdings and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • SPH Shareholders – SPH REIT Options Decay in Value

SPH Shareholders – SPH REIT Options Decay in Value

By Travis Lundy

  • Shares in Singapore Press Holdings (SPH SP) stopped trading a week ago. The election period to choose cash or cash and SPH REIT shares started yesterday.
  • The OBVIOUS choice is to take the cash. But you have ten days to see SPH REIT gain 2% to change your mind. 
  • I note Keppel wanted SPH back when SPHREIT was worth a fair bit less, but at that time they didn’t want SPHREIT when an MGO would have been cheaper.

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